With an aim to minimise the risk of further writedowns, Barclays has come up with a plan to sell approximately $12.3 billion of risky credit securities, including $8.2 billion of structured credit securities insured by monolines, $2.3 billion of residential mortgage-backed bonds and $1.8 billion of unpackaged mortgages, to Protium Finance reported The Financial Times.
Reportedly, Protium will be managed by Stephen King, the head of mortgage trading at Barclays, and Michael Keeley, a member of the Barclays Capital management committee. Both are expected to leave their positions at the bank.
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Banking analysts are of the opinion that the structured finance portfolio and the so-called monoline insurance of Barclays will further deteriorate in value and dent its profitability. However, the transaction with Protium is expected to clean some of the mark-to-market risks it faces and may reduce the chance of further writedowns.
Chris Lucas, finance director at Barclays, said: We are not seeking through the transaction to effect a change to our underlying credit risk profile, but we are restructuring a significant tranche of credit market exposures in a way that we expect will secure more stable risk-adjusted returns for shareholders over time, quoted the newspaper.
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